Post Crisis Change Management in Business Organizations
Business Organizations are often confronted by situations which induce their owners to re- examine their policies and processes. These situations are termed as crisis and needs reformulation of organizational processes, in absence of which the existence of the organization may be threatened. These situations may erupt from failure to anticipate the internal and external consequences from economic, political, ethical and technological changes related to organizational activities. Even if they are anticipated, crisis may not be altogether averted; only it helps in formulating contingency plans that are used to address post crisis situation and calls for initiating changes in the way business activities are performed.
However bringing in change in organizational environment and processes is not an easy process. It needs considerable conditioning on behavioral and performance level of all stakeholders to introduce changes. In order to implement and sustain the changes through time the organization must proceed in a systematic method guided by an influential leader who can foresee the barriers and devise strategies to address them. Also the organizational management should be committed and efficient enough to overcome the resistance to change by using relevant theories for incorporating change. This report intends to discuss the methods used for successfully implementing change after a crisis.
Crisis and its different forms in the Present Business Environment
Before an attempt is made to provide methods for successful introduction and management of change post crisis, a discussion is undertaken to understand what constitutes a crisis, the conventional and emergent situations triggering crisis in modern business environment and its impact on change management.
Scholars have defined crisis as Situations that negatively impact organizational image and operations (Sisco, 2010, 6). The negative outcome of crisis on organizational reputation has been supported by other experts also (Coomb, 1999, 5), who claims that convincing stakeholders about Crisis facts and response are quite difficult tasks but even if crisis are predicted, it is not possible to completely avert them. Therefore it can be inferred that crisis are mostly unforeseen situations that have negative outcomes on the reputation and activities of an organization. Preparedness for a crisis may only expedite the post crisis response but cannot avert a crisis.
There are various factors that precipitate crisis; an organization’s inability to respond to changing environment is the most common factor. However there are many other factors too that result in crisis and which are not predictable such as natural calamities, moral or ethical aberrations of individuals associated with an organization and sudden change in political atmosphere surrounding an organization.
Predictable crisis usually happen due to negligence on the part of officials like in the case of Union Carbide, India a subsidiary of Dow Chemicals, USA. The negligence towards maintenance and response to alarms caused the leakage of the deadly gas Methyl IsoCynate costing many hundred lives and affecting another thousand who suffered permanent disabilities (Coombs, 1995, 448). Failure to recognize critical signals often show up as crisis as in the case of Enron and J.P Morgan where financial scams resulted in paying millions in compensation and took the companies to near about bankruptcy (Markham, 2015).
Sometimes acts of terrorism can cause a sudden disruption in normal operations, the assassination of Israeli athletes in the1972 Olympics was an act of terrorism that triggered a crisis but the timely response of the organizers saved the entire events from being aborted (Miller, 1976, 7). It was also instrumental in formulation of a crisis management and emergency response policy by President Nixon. Many other instances of crisis can be cited when sale of products or services manufactured by firms receive a setback because of behavioral transgression of celebrities who endorse them.
In the present business environment where economic and political fluctuations are frequent, business firms are susceptible to situations where market of their products or services are threatened by economic recession or change in political climate. Political unrest in a country may have serious impact on business operations as normal functioning may not be possible in disturbed areas.
Consequences of Crisis
Whatever the conditions that precipitate a crisis, it has serious implications on the normal functioning of an organization, even forcing it to close its operations temporarily. In case of litigation, business firms may receive serious financial setbacks because of compensation to the victims or as fines. The most significant impact is on the loss of reputation especially in the case of products that are compromise on health and safety standards. Other losses may be losing employee turnover, financial support from investors and public credibility. Unless serious steps are initiated to mitigate the after effects of a crisis it is almost impossible to regain the organization’s image and market share it enjoyed before the crisis.
Not all outcomes of crisis can be termed as negative; sometimes restructuring and change in organizational culture can provide a complete makeover for the affected firm and it may emerge as a stronger unit post crisis. Effective leadership can sometimes turn a crisis as a boon in disguise, if it compels the organization to reorganize and emerge as a better entity (Kotter, 1999.) Therefore it can be derived that crisis has a good side if it leads to assessment of weaknesses and initiates change in the internal and external environment that not only enhances its public image but also increases its revenues and triggers expansion.
Managing Change after a Crisis
As discussed earlier, crisis leads to evaluation of the existing processes which may have directly or indirectly precipitated a crisis. There are two emergent theories or models proposed by scholars for effective management of Crisis. The first theory or model proposes crisis management as a part of Strategic management process (Preble, 1997, 771). The second theory proposes analysis of crisis events to formulate plans to prevent them in future (Smith, 1990. 265). Many organizations overlook dissatisfaction among employees which finally culminates in strikes or lock outs. Once this happens, the Management is forced to look into the factors which may have caused the crisis with a view to resolve them and introduce organizational reforms. These reforms are not very easy to implement as there may be a resistance from stakeholders whose interests may be compromised due to new policies or simply because of the fear of unknown. It is therefore necessary that the term ‘Change’ and its Management be understood properly. Literary works have described ‘change’ as something that is different from the existing or prevalent beliefs or processes. Since bringing about change involves concentrated efforts on the part of its agents, there must be specific guidelines that should be followed to initiate, implement, monitor and evaluate change. This process is called Change Management. A more formal definition of Change management is attempted by (Creasey, 2007, 3) as “Change management incorporates the organizational tools that can be utilized to help individuals make successful personal transitions resulting in the adoption and realization of change”. There are different types of changes that are introduced into an organization such as Change in leadership, Change in Organizational Values, Change in Organizational Policies, Change in Organizational Structure, Change in technology, products or processes or Change in location depending on the situation that demands a reconsideration of prevalent practices in business.
Change in Leadership
Sometimes contingencies require that current leadership style may be changed to accommodate the environmental changes. Unrest and employee dissatisfaction can necessitate changing leadership style from autocratic to a more democratic orientation in decision making.
Change in Organizational Values
A declining reputation or competitiveness can initiate a change in organizational value where performance can be changed to a customer oriented or quality oriented products or services to regain customer loyalty. There may be more emphasis on behavioral ethics and transparency as organizational values.
Change in policies
Organizations may decide to change organizational policies to build a more cost efficient system such as outsourcing human resources instead of appointing regular employees or reserve positions for minorities etc.
Change in Structure
Often, change in values, policies or processes need incorporating other functions into the existing ones or design entirely new job descriptions for implementation and supervision of changes. This leads to organizational restructuring, mobilization of work force and new reporting and communication networks.
Change in Technology, processes and products
Continuous innovations often render existing technology, products or processes obsolete and calls for up gradation of all three. This sort of a change is quite evident in the field of electronics where android technology is replacing conventional cell phones and online transactions are being used instead of traditional business methods of trading.
Change in location
Changes in external environment such as political changes, scarcity of resources and economic considerations may lead organization to relocate their operations.
All these changes are applicable after occurrence of crisis. Apart from the above mentioned changes, management may be forced to introduce changes that are specific to the occurrence of crisis such as in chemical or ammunition industries which are crisis prone. In such cases the management is more concerned about issuing warning, initiating security and evacuation and mobilizing resources in case of emergencies. Some of the strategies used by management to minimize the negative effects of a crisis are discussed below to get an insight into the post crisis change management process.
Behavioral Changes
Experts are of the view that the stand taken by the management plays an important role in handling post crisis situations. Acknowledgement of responsibility and display of compassion towards the affected people has a positive impact on the image of the company. Public apologies from business heads or spokespersons on behalf of transgressing celebrities contribute towards mitigating public outrage. Continuous communication of crisis handling operations in case of terrorist attacks, natural calamity or manmade disasters through news channels and other media restores the faith of public towards the organizational commitment towards assisting the affected people.
Change in Accountability
Very often organizations fail to identify and penalize the person or persons behind the crisis. In case of Union Carbide the image of the company was further tarnished because of its failure to identify the people behind the negligence of maintenance and safety standards. Organizations should make accountable the people in charge of specific functions for their dereliction of duties that lead to accidents and other catastrophes.
Change in Approach
Although it has been mentioned earlier in the report that preparedness cannot completely avert a crisis, it does play an important role in prompt response. A proactive approach facilitates faster mobilization of resources so that the after effects of crisis are minimized and the situation can be restored to normalcy faster. Developing a contingency plan to address the post crisis situation is a part of this approach. Also training personnel for handling and responding to crisis as a proactive strategy helps in dealing with post crisis situation.
Engaging Social Media as a means of Communication
In the era of digital communication where information travels with remarkable speed, engaging social media like Whatsapp, Twitter, and Facebook to transmit factual information and control rumors and panic is a sensible strategy. It helps in reaching more people in less time and gives them the necessary reassurance in moments of crisis. Regular posts from company representatives strengthens confidence in the organizational responsibility towards resolving crisis
Role of Change Agents in Change Management
The different types of changes and the situations that trigger change have been discussed in the previous sections. However, initiating and implementing change is not an easy process even post crisis. An organization has many components, both internal and external associated with it that are affected by the change and may offer resistance to change. Resistance to change is often a result of ignorance and suspicion. Stake holders have an innate fear that change may be detrimental to their individual interests such as losing jobs, marginalization after restructuring, complicated processes and losing their money. Therefore management must engage change agents or catalysts to prepare organizations for impending change.
Change agents or catalysts are usually line managers who enjoy a good rapport with the stakeholders and can apprise the latter of the situations that demand a change. They also assure the stakeholders how the changes proposed will be beneficial for all as well as the grave consequences faced by the organization and individuals if firms fail to take lessons from the crisis and implement changes. A transparent and participative management helps in winning employee confidence and generates internal and external cooperation in implementing change.
Conclusion
Post Crisis Change management is triggered by crisis and has its roots in analyzing the factors that precipitated the crisis such that the change is intended to address these factors. Post Crisis change management is most effective when a proactive approach and modern methods of communication are adopted to respond promptly to crisis.
References
Coombs, W.T., 1995. Choosing the right words the development of guidelines for the selection of the “appropriate” crisis-response strategies. Management Communication Quarterly, 8(4), pp.447-476.
Coombs, W.T., 1999. Information and compassion in crisis responses: A test of their effects. Journal of public relations research, 11(2), pp.125-142.
Creasey, T., 2007. Defining change management. Prosci and the Change Management Learning Center.
Kotter, J.P., 1999. John P. Kotter on what leaders really do. Harvard Business Press.
Markham, J.W., 2015. A Financial History of the United States: From Enron-Era Scandals to the Subprime Crisis (2004-2006); From the Subprime Crisis to the Great Recession (2006-2009). Routledge.
Miller, J., New York Times and United States of America, 1976. Bargain with Terrorists? New York Times Magazine, p.7ff.
Preble, J.F., 1997. Integrating the crisis management perspective into the strategic management process. Journal of Management Studies, 34(5), pp.769-791.
Sisco, H.F., 2010. Crisis definition and response: Understanding non-profit practitioner perspectives. Prism Online Journal, 7(2), pp.1-11.
Smith, D., 1990. Beyond contingency planning: Towards a model of crisis management. Organization & environment, 4(4), pp.263-275.
